Italian PropTech Update No 3

As we discussed earlier in this blog series, the Italian PropTech scene is underdeveloped compared to many other markets in Europe and internationally. The Real Estate Center (REC) (the Milan Polytecnic’s real estate research facility) sits at the centre of this sparsely populated ecosystem, and its PropTech Monitor research and events program is the industry go-to.

I have partnered with the REC for this blog, and together we will be providing FUTURE: Proptech with regular updates on the Italian PropTech scene. Inspired by Andrew Baum’s taxonomy, the REC came up with a categorization of the Italian PropTech market in 4 segments: Real Estate FinTech, Smart Real Estate, the Sharing Economy and Professional Services. We will analyse each of these segments by speaking with a number of Italian startups for each. Today we will be focusing on the “Real Estate Fintech” segment, which comprises at least 13 startups. We asked 3 of them the following questions.

HOMEPAL:

Quick overview: Homepal is Italy’s biggest online agent

Your goals: To let sellers and buyers manage the process directly and save over 11k EUR in agency fees per transaction

The opportunity: a huge market (over 500k transactions per year worth 5 bio EUR) that is fragmented, poorly regulated and underserved by tech

Greatest obstacles encountered: capital sourcing, brand awareness and the difficulty in sourcing the right kind of staff for this business

How you are overcoming them: building a compact team with complementary skills; showing investors the continuous growth of the business model as well as results; investing in creative marketing campaigns that can successfully communicate Homepal’s disruptive model

The biggest barrier to PropTech in Italy is: the lack of a PropTech ecosystem. It’s a little known and understood sector, with small investment volumes and a total dearth of specialised investors

This could be solved by: creating opportunities for PropTech stakeholders to interact with one another. A real boost would come if leading real estate players were to come together and begin investing in startups, as happened for FinTech.

CONCRETE INVESTING:

Your goals: To become the leading European crowdfuding platform for real estate. We want to help developers raise capital faster and break down barriers to entry for investors

The opportunity: the market opportunity is potentially enormous and in the near future blockchain – specifically the use of security tokens for crowfunding transactions – could boost automation and efficiency in this sector

Greatest obstacles encountered: getting developer buy-in was the hardest thing by far. While in the US and UK crowdfunding is a well-established phenomenon, it is in its infancy in Italy and developers hailing from a sector that is still very traditional need time to understand what we are offering

How you are overcoming them: we only work with high quality projects in order to build a strong track record. This will allow us to avoid adverse selection and hopefully generate FOMO

The biggest barrier to PropTech in Italy is: the lack of a tech culture in our clients and a tendency to stick with traditional methods. Though many developers are curious about what we are doing, we have also noticed a certain aversion towards being first movers

This could be solved by: proving our business case through solid case studies and high quality partnerships

REVIVA:

Quick overview: ReViva helps banks and other entities holding NPLs to recoup more money faster through the auction process of the buildings that guarantee these loans. On average the auction price is 56% higher through ReViva

Your goals: Italy has the most NPLs in Europe: 250 bio EUR still sit within banks’ balance sheets and a further 200 bio EUR have been sold. 86% of NPL related property auctions are deserted and banks recoup only 33% of the loan’s value (paying fees of up to 25%). We want to help banks clean up their balance sheets and reduce the debtors’ post auction residual debt

The opportunity: there will be 700k new auctions for 168bio EUR in NPLs over the next decade. Our value add sits in our valuations system and the big data driven analytics we use to write business plans for real estate deals from the data we have access to via the auctions process, which we are using to expand into the real estate development field. We are also looking at the European market, especially France and Spain.

Greatest obstacles encountered: the cofounders are NPL experts but had to learn how to build a business from scratch

How you are overcoming them: we studied a lot, as well as having the opportunity to share our ideas, problems and experiences with other startuppers and entrepreneurs. Our goal is to become market leaders for investments into NPL related buildings

The biggest barrier to PropTech in Italy is: the tendency for the industry to stick with traditional methods. Most players in the space won’t consider partnering with startups to improve the way they work

This could be solved by: the work that the Milan Polytecnic is doing with startups is a great first step, as on the one hand it showcases those that are on the market and on the other it connects its students with both tech and real estate.

Stay tuned for more updates on the Italian PropTech market, starting with the remaining three segments.